Compugen Ltd

NASDAQ:CGEN

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's Third Quarter 2023 Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. An audio webcast of this call will be made available on the Investors section of Compugen's website, www.cgen.com. Please note that if the sirens go off during this call, we will need to end the call to take shelter.

I would now like to introduce Yvonne Naughton, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

[Yvonne Naughton, executive]

Thank you, Yani, and thank you all for joining us on the call today. Joining me from Compugen for prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Alberto Sessa, Chief Financial Officer. Dr. Henry Adewoye, Chief Medical Officer, will join us for the Q&A session.

Before we begin, we would like to remind you that during this call, the company may make projections or forward-looking statements regarding future events, business outlook, research and development efforts and their potential outcome, anticipated progress in plans, results and time lines for its programs, financial and accounting-related matters, including projected financial information as well as statements regarding the company's future cash position and other results, and the company's future initiatives.

We wish to caution you that such statements reflect only the company's current beliefs, expectations and assumptions and that actual results, performance or achievements of the company could differ materially. These statements are subject to known and unknown risks and uncertainties, which could cause the company's actual results to differ materially from those projected in such forward-looking statements. And we refer you to the SEC filings for more detail on these risks, including the company's most recent annual report on Form 20-F filed with the SEC on February 28, 2023, as later amended. The company undertakes no obligation to update projections and forward-looking statements in the future.

And now I'll turn the call over to Anat.

[Anat Cohen-Dayag, executive]

Thank you, Yvonne. Good morning and good afternoon, everyone, and welcome to our third quarter 2023 update. I will start by saying a few words on heartbreaking situation in Israel, a humanitarian disaster. We are traumatized and devastated by the inhuman slaughtering and kidnapping of civilians by the terrorist group Hamas. This brutal attack showcase. I'm deeply thankful for all the kind words of support as we see from so many friends, colleagues, partners, investors, families and the medical associations from across the world. Your solidarity means so much to me and provides comfort amid all the anguish and unbridled pain. Thank you.

We recognize the emotion and toll this is taking on our employees in Israel, and we are taking care to manage the employee need with a lot of flexibility and care. Despite what our team members are going through, this is a time when we see teamwork at its best, everyone supporting the other and stepping in to ensure we have no gap. The teams are working hard together to ensure we continue to execute and meet our goals. Some are giving 150% when others are not able to. I'm seeing it every day, and it makes me proud.

The infrastructure for remote working was established during the COVID pandemic. And although we allow certain things to work remotely, we are encouraging our employees to come to the office. As a global company with headquarters in Israel and present in the U.S., Europe and Singapore, some management members and teams responsible for some of our key functions, including clinical development, preclinical development and IT systems, are based outside of Israel.

Our clinical trials are run in the U.S. and operating in the ordinary course of business, including with respect to CMC and drug supply. Also, most of our preclinical activities related to COM503 are performed outside of Israel. We continue to work with no material impact on our operations. And if this changes, we will communicate it to the market.

At Compugen, our goal is to transform the treatment of cancer patients who have no effective treatment options by using our pioneering computational platform to discover novel drug targets and develop potential first-in-class drugs. On this front, we're executing on our differentiated clinical approach to evaluate the blockade of the 3 pathways: PVRIG, TIGIT and PD-1.

We're also advancing IV-native studies with our lead preclinical potential first-in-class anti-AV antibody contract or free, offering a novel approach to harness cytokine biology to address resistance to cancer neurotherapy. And we're advancing our earlier-stage pipeline with additional new potential first-in-class programs.

At SITC conference, which just took place, we presented additional data reinforcing a COM701-mediated antitumor activity in tumors typically not responding to immunotherapy. This data, which we continue to collect and share from our prior single [ taking ] studies, adds to the breadth of tumor types typically not responding to anti-PD-1 but responding to COM701 combination.

Also, the vast dictation from patients treated in these studies allows us to advance our biomarker insights as well as further confirm the COM701-mediated mechanism of action. And in parallel, we're conducting our ongoing study hoping on NSCLC and platinum-resistant ovarian cancer.

Building on data we presented at ESMO IO last year, at SITC, we reported clinical info durable partial responses in platinum-resistant ovarian cancer patients treated with COM701 triple combination with no new safety signal. 3 patients are continuing study treatment for more than 16 months. While the numbers are small, typical median duration of response for this population is 3 to 4 months with standard chemotherapy, where 6.9 months reported in patients treated with the recently approved antibody drug conjugates.

In addition to these durable responses, our trigger combination has the potential and advantage of several safety and tolerability profile, which as we reported previously, investigators believe is important for patients' quality of life.

We also reported that clinical benefit defined as partial response or stable disease of at least 180 days with independence of data inflammatory status and was associated with an increase in CD8 as Pisincreasration into the tumor, suggesting again and consistently broke previously reported a COM701-mediated mechanism of action.

Excitingly at SITC, we showed for the first time in tumor bases an association between the expression of the PDLIG-ligand PVL2 and clinical benefit, which will suggest the potential of patients' baseline PDL-1 level as a biomarker to help and reach for patient who may gain clinical benefit from COM701 combination. This is consistent with a basic computational-driven hypothesis we shared for this pathway in the past. This initial association finding suggests a COM701-mediated mechanism of action and has the potential for informing our study, and I will come back to it later.

At SITC, we also reported data in heavily treated metastatic breast cancer patients. COM701 when combined with nivolumab resulted in preliminary antitumor activity with an overall response rate of 12%, including one complete response for over 21 months in a patient with HER2-negative metastatic breast cancer, a tumor that is considered immune calls; and the partial response for 10 months in the patients with a triple-negative breast cancer, which is the fastest-growing and most aggressive kind of breast cancer.

The disease control rate was 29%, and the 3 patients with stable disease were PD-L1 low and with low tumor mutation burden and baseline, suggesting a COM701-mediated mechanism of action. In again, we reported good safety and tolerability with this drug combination.

These findings are important because this is yet another indication in which patients are deriving durable benefit from COM701 combination despite typically not responding to immunotherapy. Additionally, like the initial biomarker work in platinum-resistant ovarian cancer, in these metastatic breast cancer patients, we showed the baseline PVRL2 expression levels are higher in patients with clinical benefits, further supporting our biomarker hypothesis.

And finally, at SITC, the start of an oral encar presentation, we shared new data on our preclinical potential first-in-class anti-IL-18 bimiprotein antibody configure, further supporting our exciting novel approach to harness minocycline biology to tackle resistance to cancer immunotherapy. As a reminder, there is a huge excitement in this space as cytokine has the potential to be a powerful therapeutic but has been plagued with challenges of giving them systemically at levels high enough to reach and modulate the tumor environment without closing systemic side effects.

We have found a way to address this for the IL-18 tanker. Contract for free blocks the interaction between IL-18-binding protein and IL-18, thereby creating natural IL-18 to inhibit cancer growth in the tumor micro environment. The data we presented at SITC addresses 2 pertinent questions. One, are IL-18 levels in the tumor sufficient to provoke an end tumor response for antibody blockade of IL-18 BP? And two, is an IL-18 VP antibody safer than an engineered IL-18 cytokine that is given systemically.

When we start on the first question, relating to IL-18 levels in the tumor, we showed that: one, antibody inhibition of IL-18 BP freeing natural IL-18 presents tumor growth in multiple mouse tumor models; and two, COM701 has the potential to release local production of IL-18 in human tumors above the minimum rate needed to stimulate immune systems. We also showed that antibody inhibition of IL-18 BP induced a significant increase in functional immune cells, such as the effect of titer and induce a sickle extension in the tumor as well as immune memory response. So I would suggest that the answer to the first question is yes. IL-18 level in the tumor are sufficient to provoke an antitumor immune response following the antibody blockade of IL-18 BP.

In addressing the second question relating to whether an IL-18 BP antibody safer than an engineered IL-18 cytokine given systemically, we showed that an engineered cytokine generated peri coital inflammatory responses evidenced by increased term cytokines and cytes. This compress with our IL-18 BP antibody approach, which modulate the tumor microenvironment without affecting the periphery.

The overall data for our COM503 program suggests that our anti-IL-18 BP antibody approach has a leading edge in inhibiting tumor growth while avoiding peripheral toxicity associated with the administration of a recombinant IL-18 cytokine.

And noting a successful SITC, I would like to refer to additional progress we have made in the quarter. We are delighted to report that we have completed enrollment in the MSSP a proof-of-concept study, which is a testament to the substantial unmet medical need in these patients and lack of alternative options. We continue to monitor patients on study treatment, and we believe it will be more prudent to provide an update when we have longer follow-up from these cohorts in the first half of 2024. And our preference is to do this at a medical conference.

In the platinum-resistant ovarian cancer study, enrollment is increasing since we last reported with the activation of 2 additional studies. Nevertheless, completion of enrollment of up to 20 patients will move into 2024. The platinum-resistant ovarian cancer landscape is continually evolving and becoming more competitive. Although we did not expect an impact of mirvetuximab on our enrollment, which as per label is restricted to about 40% of product alpha-high patients, ovarian cancer investigators are indicating there is the clinical community gain more confidence in the use of mirvetuximab, which is having an impact on our environment.

Following comprehensive discussion with our investigators, we are optimistic that we can address this gap in the working growth with our investigators on patient enrollment. Our investigators remain enthusiastic to further enroll for our study based on the durability of responses with our triple combination reported at SITC as well as a preferable safety profile.

In addition to our progress, I'm delighted to say the progress of our partner AstraZeneca is making it season. Their PD-1 taking bispecific derived from our COM902, which has progressed into Phase III and adjuvant therapy for biliary trust cancer after rejection in combination with chemotherapy. In addition, AstraZeneca continues to progress their vegostomic Phase I and II programs in additional indications. I believe that the progress of the resigastomy clinical program demonstrates the commitment to explore the potential of TIGIT and our differentiated NTT COM902. We will comment to the reduced active pesto function anti-TIGIT antibody, whereas resigastomy was engineered to reduce the effect of functionality with the potential to enhance antitumor activity.

Now moving on to what you should expect to see from us next. First, we plan to report data from our ongoing proof-of-concept study in MSS-CRC in the first half of 2024. Second, we plan to enroll up to 20 patients in our ongoing proof-of-concept study in platinum-resistant ovarian cancer and report data in 2024. More specific guidance will be shared during our end-of-year conference call.

Third, identification of a predictive biomarker during which for responders for COM701 combination was always important for us. To this extent, we're excited about the progress we have made on generating initial biomarker data, which I alluded to earlier, showing for the first time an association between the expression of PVRIG and PVRL2 and clinical benefit that is consistent with our computational predictions. We will continue to build on these preliminary findings as part of our ongoing platinum-resistant ovarian cancer study in which rates are mandatory.

In parallel, we're also optimizing our PDL2 assay to feed the potential patient selection study. Having the potential to enrich for responders in the platinum-resistant ovarian cancer patient population, together with the durability of response and the safety profile of our triplet combination, may allow us to build a unique development bank for our triplet regimens. We will communicate early next year on how we will use this data to inform future direction. And finally, we are on track for IND filing for COM503 in 2024.

Before handing over to Alberto, I will talk briefly on our finances, and then Alberto will go into the details. We have an expected cash runway through at least the end of 2024, which we believe is sufficient to support all planned operations. This does not include any potential cash inflows, including potential milestone payments which we may become eligible for through our partnership with AstraZeneca. Also, as we indicated, obtaining nondilutive cash from partnering is a priority, and we are focusing our efforts on that front.

With that, I will hand over to Alberto for the financial update.

[Alberto Sessa, executive]

Thank you, Anat. I'm happy to summarize our financial results. I will start with our cash balance. As of September 30, 2023, cash, cash equivalents and cash investments were approximately $57.5 million compared with approximately $83.7 million as of September 31, 2022, affirming our focus on cash management while continuing our execution on our D1 axis hypothesis and progressing our lead preclinical drug candidate, COM503. As Anat mentioned, we have an expected cash runway to at least the end of 2024, which we believe is sufficient to support all our planned operations. The company has no debt.

Now regarding expenses. Expenses for the third quarter of 2023 were in line with our plans. R&D expenses for the third quarter of 2023 were $8.3 million, down from $9.3 million in the third quarter of 2022. The decrease is mainly due to lower expenses associated with our CMC activities, offset by an increase in clinical trial expenses and by the end of the amortization of the deferred participation in R&D expenses following the termination of the agreement with BMS in the third quarter of 2022.

G&A expenses for the third quarter of 2023 were $2.3 million compared to $2.6 million in the third quarter of 2022. Net loss for the third quarter of 2023 was $9.9 million or $0.11 per basic and diluted share compared to a net loss of $11.7 million or $0.14 per basic and diluted share in the third quarter of 2022.

With that, I will hand back to Anat to summarize.

[Anat Cohen-Dayag, executive]

Thank you, Alberto. To summarize, we continue to execute. With our most recent data presented at SITC, we continue to provide evidence supporting a potential COM701-mediated clinical benefit in hard-to-treat patients who are not responding to standard of care and failed prior IO therapy. This strengthens our path as we continue to pursue our ongoing proof-of-concept study designed to reinforce the data in our 2 selective indications and continue to inform our complementary biomarker strategy.

We're looking forward to presenting data from these studies in 2024 and providing more details on our biomarker strategy, informing future direction and related studies. We've always said that blocking TIGIT may not be enough and that PVRIG may be needed. This belief is consistently being reinforced as we roll out our clinical data across multiple indications and most evidently in hard-to-treat patients, who are not responding to standard of care and failed IO therapy.

With COM701 and COM902, our 2 very own PVRIG and TIGIT program, we are the leader in the unique chemotherapy-free combination approach of blocking 3 is immune checkpoints, PVRIG, TIGIT and PD-1, with initial clinical data to support our hypothesis. We're also paving the way in harnessing cytokine biology to advance cancer immunotherapy resistance, which is still of high interest to the industry. We've closed cycle 3 targeting the IL-18 pathway. We're on track to IND filing in 2024.

I would like to thank all our employees for their dedication team work and resilience despite the challenges we have been enduring in Israel.

With that, I will turn the call back to the operator to initiate the Q&A session.

[Yvonne Naughton, executive]

Actually, before we go to the operator, I speak Pierre Are, our Vice President of Preclinical Development, just joined us fresh off the plane from SITC in San Diego. Pierre will be glad to answer any questions on COM503, which caused a lot of interest after his oral presentation at SITC. Welcome Pierre. Yani, you can now initiate the Q&A session.

[Operator]

[Operator Instructions] The first question is from Asthika Goonewardene of Truist.

[Unknown Analyst]

I'm Jane on the line for Asthika. So I have a question regarding about -- the first question is about what's the expected -- your expected milestones or time lines in 2024 and beyond for the program? You call developer with your partner, AstraZeneca. And then could you give us more details about how both parties will handle this program? How will you monitor and evaluate the progress and the performance of this progress? That's my first question.

Second question is regarding your, of course, COM503. So I would like to ask, how are you going to determine the optimal dose and schedule for this COM503? And then in the animal or SME study, preclinical pennil? And then how are you how will you account for the variability and also stability of this IL-18 and IL-18 PD levels in the different individuals or conditions? Okay. That's my 2 questions.

[Anat Cohen-Dayag, executive]

Thank you, Jane. And so I'll start with the first question that relates to AstraZeneca. And then Pierre will take the second question that relates to COM503. So first, I'll say that with AstraZeneca, the pharmacies that we have is actually a license agreement where we license to AstraZeneca the rights to develop bispecific antibodies based on our COM902. And from the get-go, this agreement is actually granting the right for AstraZeneca for the full development and the later commercialization of the program.

We're getting updates on this program, but this program is really progressed by AstraZeneca. And obviously, any information about this program will be disclosed only by AstraZeneca. Specifically for contractual reasons, I cannot provide any insight about the specific milestones and the breakdown and the timing and the eligibility. The only insight that I can give on this front is that the clinical milestones that we were already obtaining were eligible, for instance, for the initiation of patient dosing in Phase I and in Phase II. It was $6 million for Phase I and $7 million for Phase II. And other than that, at this point in time, not more. And as I stated, this is really AstraZeneca's strategy in how to advance this program, to which indications and at what timing.

And Pierre, will you take the COM503 questions?

[Unknown Executive]

Yes, my pleasure. So you were asking how we would conduct the Phase I study to go to the active dose. So to do that, we will, of course, run the Phase I cancer patients with standard dose escalation with some accelerating maybe dose escalation.

About the dose itself, we have built a large experience at Compugen on the tools and the methods needed to measure all the components required for the pathway. We are still the comprehensive translational package with all our experience in vivo with vivo models, bearing cancers and also lots of experience on in vitro testing on human samples. So we have made -- and this will be ongoing for the rest of the time that goes to the clinical trial. We have built a comprehensive PK/PD modeling that we will aim to follow during the course of the study.

We -- with the tools that we have, we can monitor the suppression of IL-18 in the periphery of the patients, and that will be the basis -- the main basis of reaching the actual dose. A very interesting thing with that program is the safety so far that we've seen in all the animal models and also the human in vitro models that we have tested. And so with that safety in hand is that transfer into the expected high tolerance in patients, we really think that we were able to reach active dose levels that saturate IL-18 PD target easily in the tumor.

[Operator]

The next question is from Daina Graybosch of Leerink Partners.

[Jeffrey LaRosa, analyst]

This is Jeff on for Daina. I just have a few questions related to the biomarker data you put forward at SITC. Where -- can you just recap where you are in the process of developing containing diagnostics to richer PL2 patients, respectively? And how would this path differ for IHC or genomic amplification to pain diagnostic? And is any one more practical than the other to implement?

Second, do you think the data you shared on people able to express it in ovarian cancer in that genomic amplification data more broadly is something you can leverage to facilitate enrollment indication? And next year when you report ovarian MSS-CRC data, you plan to show this retrospective PVRIG expression to had in these patients?

[Anat Cohen-Dayag, executive]

So thank you, Jeff. I'll start with answering the first portion of the question of what we are and how we move forward, and then Pierre can relate to IT and genomic amplification. And so I'll just say that a big point in time, but we're very excited with the data that we got and still then -- it's still initial by pointing in the exact right direction that we were thinking of. As stated, we'll bring the potency based on computational data. And we are continuing to collect data, and this is from the ongoing study. It is incumbent for us to add more patients and generate more robust data as we go with the ovarian cancer extent.

For the meantime, we're also developing an assay. But I want to make sure -- maybe Pierre want to relate it as well when he answers. And it is not a final companion diagnostic assay. We're now in parallel of collecting more data. We're optimizing the assays. They will be used eventually for screening patients in a study. It's not going to be the ultimate companion diagnostic assay. But we're trying to work aggressively on both fronts, on collecting the data and optimizing an assay so we are ready to be able to take it forward based in -- pending the data, will continue to look good.

Pierre, do you want to relate to the tester questions or to add?

[Unknown Executive]

Yes. I would say that the IHC assay is being optimized for use in the Santa laboratory that we already used in the recent past generator data. And based on those data, we are optimizing it further to make it easier on practical terms in a day-to-day basis when we -- if and when we will activate prospectivization selection.

And about the general mix, indeed, in the poster that we reported in SITC, we have flagged that one of our patients having the highest score on IHC PVRL2 is also showing a genomic amplification that may be detected perhaps in the future from peripheral blood from the periphery. So it will be a noninvasive way of assessing the biomarker and the possibility that the patient may respond. We view that association between genomic amplification and the high score of PVRL2 are the first confirmation that there is something there of interest.

So in public databases on ovarian cancer, it is a low proportion of patients that are having genomic amplification. So we don't think that immediately, it will be achievable to screen patients on that front. But we are intrigued also by the fact that there are gains, not only amplification but also gains. And this is something that we will explore, of course, in parallel. But we do think that the IHC that we have in hand will be proximal for any study if we are going to activate that.

[Operator]

The next question is from Steve Willey of Stifel.

[Stephen Willey, analyst]

Can you just speak to, I guess, how many sites are currently active in the ovarian trial? I guess, how many have you brought on just within the last few months? And I guess, over the longer term, do you think you need to bring on more sites in order to expedite patient enrollment?

[Anat Cohen-Dayag, executive]

Thank you, Steve. So right now, we have 9 sites active. We have a few more, which is based on the plan that we've already rolled when we were thinking about ramping up. And we don't think that we should add additional sites beyond what we planned and what we're looking to do now. And the reason for this is what I was just alluding to in the prepared remarks.

So first, we believe that the close monitoring that we're doing now with the investigators. And again, trying to make sure that the study is on the radar, this is something that is -- we are going to achieve the goal. And this is after we added ovarian cancer-specific sites, the sites that are enrolling specifically ovarian cancer patients.

So these 2 things at listed, making sure that we see with the investigators and we have -- I have to say that during their comments about how they think about the triplet activity, mainly the durability in conjunction with the safety because these patients, they really experience so many lines of treatment, and we don't really need to convince them. So we believe that the ramp-up that we started to see will continue and that we don't need to add additional sites to the study.

[Stephen Willey, analyst]

Okay. And then I think you said that -- I mean you're obviously assaying for PVRL2 expression. So I think you said biopsy is mandatory. Is the ask of a patient both in on treatment and then, I guess, a baseline and then multiple on treatment biopsies? Or are you just looking for one specific biopsy. And I guess, is that second on-treatment biopsy requirement, is that in any way rate-limiting in terms of your ability to get patients to solicit consent?

[Anat Cohen-Dayag, executive]

It's a very good question. So -- and maybe Henry will want to add anything about it. But then -- but in any case, in any study when you ask for biobased disease in Herdan, obviously, because patient needs to go through some invasive approach. But we don't anticipate at this point in time that this is a big time. We ask for mandatory base beta in the priority treatment and also on treatment.

And this is really serving that in order to make sure that eventually, we can go with platinum-resistant ovarian cancer data that we had and into what eventually will be [indiscernible] that will allow us to maximize the potential of concern treatment for patients that may respond to this treatment. So at this point in time, this is mandatory. With this mandatory request, we do see a ramp-up, and we're going to make the [ Q4 ] enrollment.

[Stephen Willey, analyst]

Okay. And then just lastly on the colorectal trial. I know this is open label. Do you have a sense as to what the distribution of patients looks like with respect to the presence or absence of liver metastases at baseline?

[Anat Cohen-Dayag, executive]

So I'll start and then, Henry, you maybe want to add. Yes, it's open label. We're familiar with it, but we're not looking every day on the patient distribution. We're familiar with it. We are this kind of study that allows for liver mets, and that's unique. And this is because we believe that there could be some edge there based on the prior data.

But as I said, we continue to monitor patients. We continue to collect the data. And we're thinking very hardly on what data we should share, why the study is continuing. But we've made the decision that it's better for us not to share portions of data, incomplete picture. It's better for us to have a longer-term follow-up and share for this year, as I said, proposing at a medical conference where investors will be able to see the full picture of the data.

Henry, anything asking that to add on the liver mets and ask the question?

[Henry Adewoye, executive]

Thank you, Anat. I think you've covered the major part of the question. But just to give some color, looking back at the data we presented previously, only 22 subject patients with microsatellite colorectal cancer. At a little above 3/4 of those patients have liver mets. That was the initial presentation we had. The number of patients that we anticipate will have liver mets will also probably be around that number based solely on the fact that most of these patients have exhausted all available standard of care therapies.

And in addition to that, most common sides of the tactics of colorectal cancer, just to aplite, is the liver. So between 1/2 to about 2/3 or about 3/4 quarters of patients will probably have liver mets on our analysis.

And I'm just looking at an assumption here and a projection until we do look at that data next year, like Anat has mentioned, before we'll be able to give you more substantive information on that regard.

[Anat Cohen-Dayag, executive]

And maybe -- Steve, maybe I'll just add, just to make sure that this is -- that it is clear that in a biomarker-driven study, we will obviously only require for a baseline biopsy pretreatment biopsy but nothing on-treatment biopsy, which will be less complicated.

[Operator]

This concludes the Q&A session of Compugen's investor relations conference call. Thank you for your participation. You may go ahead and disconnect